This Blog will basically discuss economic issues, with some history and political events thrown in. The author is a mix of Conservative and Liberal impulses, with matching Authoritarian and Libertarian trends.

Saturday, February 19, 2011

Product Tax

I tire so easily these days, especially after hearing Commentary about Core Inflation not rising as quickly as the CPI, when the later throws out all those Products and eventually Services which are actually increasing. An individual asked me What there was to do with Government organs who would not admit that American Consumers were being taxed by adverse Pricing policy in the interest of the Multinationals. I told the individual that one had to hit such leadership where it hurt, and the best avenue was Tax policy. It is here where political leadership is most vulnerable as the Tax Code is a ridiculous Joke. He returned with a query of How Tax law could handle both static Wages and rising Prices. I told him that We would need to force the Price increases across the board, so that all Wage levels would bring universal demand for enhanced Wages at the same time. He wanted to know how such could be done, but I had not ready Answer.

I thought that We had to get a little Crazy here, but in a specific way which would accomplish the task. I brought out the old venerable Product Tax. It is highly similar to the old Salt Taxes, except it has a uniform rate through the economy unlike the later. I would suggest a real punch to the assessment, with understanding that We have real need to raise revenues. I determined that 20% of total Sales will provide both revenues and shake loose Wages as well as Prices. States and Local entities could be aided by directing 2% of raised revenue to the States, and 6% of the revenue to the Local governments; under the strict proviso that the federal government was off the hook for Medicaid and Welfare. Producers will all scream about no consideration for their heavy Costs, so that with the periodic filing of Expenses, they would receive 92% of those Costs; the 8% ensuring that Business itself was taxed in manner where they could not pass the tax onto the Consumer.

The Product Tax differs from ordinary Income tax in several important ways. There remains little chance to hide Income by fictional Costs or magical debt which is never paid. The static nature of Wages is almost impossible to maintain under such circumstances as presented by the Product Tax; One can hide neither the Income or the Income loss from taxation. It strengthens the hand of Labor for Wage Increases, with vengeful Quitting if Workers do not get proper response to their own crisis from their Employers. Business can still hide their total sources of Income under such taxation, but Tax law can insist that Business must register all Cash Register tapes; a simple routine of filing each Slip daily by Internet access; the law should also include an exorbitant Fine for non-compliance, such as 50 times the sum found non-Reported. The Whole should shift the Game Rules to where Labor can achieve a greater share of the Profits of that productivity they have been showing over the decades. lgl